1. Role of Investors in Entrepreneurial Ecosystem Lessons from Silicon Valley Naeem Zafar Twitter: @naeem Faculty member, University of California, Berkeley www.Startup-Advisor.com

2. San Francisco Bay Area & Silicon Valley 2Naeem Zafar (c) all rights reserved

3. Thousands of Great Companies Naeem Zafar (c) all rights reserved3

4. 4 All rights reserved © Naeem Zafar History of the Valley 1960s semiconductors 1980s1990s2000s1970s Personal Computers Internet Wireless, Web 2.0. Green, Orchards 2010s Mobility, social, Big data

5. Attitude of Collaboration Good ideas emerge as people interact, discuss & refine concepts Naeem Zafar (c) all rights reserved5

6. Shared Reward Divide rewards generously Naeem Zafar (c) all rights reserved6

7. Protection of IP Strong protection of IP (intellectual Property) encourages innovation Naeem Zafar (c) all rights reserved7

8. Critical Mass Engineers Lawyers Marketing & sales people Experienced managers Investors Naeem Zafar (c) all rights reserved8

9. Failure Celebrated! Culture values people who failed in a venture! – Some one else has paid tuition for their learning! Naeem Zafar (c) all rights reserved9

10. Culture of Innovation & Entrepreneurship 1.Collaboration 2.Shared reward 3.Protection of intellectual property 4.Critical mass of talent & infrastructure 5.Culture of accepting failure Naeem Zafar (c) all rights reserved10

11. How Do You Create a Silicon valley in Turkiye? Naeem Zafar (c) all rights reserved11

12. Mentorship Eco-system of Entrepreneurship & Innovation All rights reserved © Naeem Zafar12 Access to funding Favorable Public Policy Entrepreneurship education

13. 13 Funding Needs homework Bootstrap Or Angel Prod DevDeploymentproliferationPrototype Series ASeries BSeries C F&F naeem@Startup-advisor.com ~6 mo. ~6 to 12 mo. ~6 to 18 mo. ~12 to 18 mo. $10K to $50K$50K to $2M $2M - $10M$5M - $20M$10M - $50M

14. Raising Capital is Hard! Sources: – Friends, family and fools – Angels – Venture capitalists – Strategic investors naeem@Startup-advisor.com14 You! Domain, You Traction, Exit! Channels, products, technology

15. Angel Investing People who can afford to put a portion of their wealth in startup companies – For superior returns – For staying engaged in the domain they love with doing heavy lifting! – Portfolio approach 6 to 10 investments with diversity Naeem Zafar (c) all rights reserved15

16. Angel Investment is Hot! VCs invest $20B a year in ~3,000 deals per year 10x bigger than VCs Angels are investing between $20B and $30B in ~30K deals per year  10x bigger than VCs ~2/3 rd of all IPOs never took VC money (only Angels invested) naeem@Startup-advisor.com16

17. Demystifying Venture Capitalists Firms with partners who have financial & operating experience Invest other people’s money in high risk, high reward ideas Nurture & guide them to an exit naeem@Startup-advisor.com17

18. VC Business Model Capital from Limited Partners Partnership managed over a ~10 years by General Partners Money returned to LP as companies exit (merger, IPO) Fund Keeps 2% per year of fund size as management fees + 20% of profit (carry) 18naeem@Startup-advisor.com

19. Raise Money in Chunks naeem@Startup-advisor.com 19 time Valuation Risk: tech, team, market Risk: team, market Risk: team, execution Risk: mkt size seed Series A Series B Series C

20. Becoming an Angel Investor 1.Deal flow 2.Screening for good deals 3.Due diligence process 4.Term sheet – offer to invest 5.Closing (legal issuance of shares) 6.Role of an Angel investor 7.Exit – helping company achieve liquidity Naeem Zafar (c) all rights reserved20

21. Median Angel Round ~$680K Naeem Zafar (c) all rights reserved21 Source Halo Report 2013

22. Median Valuation $2.5M Naeem Zafar (c) all rights reserved22 Source Halo Report 2013

23. Angel Investment Pays http://www.angelcapitalassociation.org/ Naeem Zafar (c) all rights reserved23

24. Angel Investment is Lucrative: 2.6X Naeem Zafar (c) all rights reserved24

25. Rise of Angel Groups Dividing the work of evaluating and monitoring investments – Standardized processes & term sheets – Better deal flow - quality and quantity – Diversify your angel portfolio, reducing risk Naeem Zafar (c) all rights reserved25

26. Rise of Angel Groups Angel groups – The Angel’s Forum http://www.angelsforum.com/http://www.angelsforum.com/ – The Band www.bandangels.comwww.bandangels.com – Sand Hill Angels http://www.sandhillangels.comhttp://www.sandhillangels.com – Keiretsu Forum http://www.keiretsuforum.comhttp://www.keiretsuforum.com Naeem Zafar (c) all rights reserved26

27. Angel Groups Stay current on new ideas, technology, trends – Networking with a successful peer group – Build your investment skills – Support your community by mentoring entrepreneurs Individual angels may remain anonymous – Pooling capital to raise sufficient money – Connections to venture capital firms Naeem Zafar (c) all rights reserved27

28. Angel Group Deals Distributed Naeem Zafar (c) all rights reserved28

29. Most Active Angel Groups Naeem Zafar (c) all rights reserved29

30. To Become An Angel Investor Start a chapter of Keiretsu Forum – 26 chapters, 1000 members, 3 continents http://www.keiretsuforum.com.tr You get: – Deal flow, method, forms, network, education Naeem Zafar (c) all rights reserved30

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33. The Process of Angel Investing Educate yourself Set aside a portion of your money (~10%) – That you can afford to lose Select a thesis/premise/method Meet a lot of entrepreneurs – Get to know them & their business – if chemistry is right, invest small chunks if you can see how follow on money will follow Build a portfolio of companies Use convertible debt or agree on valuation Naeem Zafar (c) all rights reserved33

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35. Summary Investors play a huge role in the entrepreneurial ecosystem A popular & just way to make money since early days of civilization Fun, frustrating, lucrative, never-boring! Naeem Zafar (c) all rights reserved35